Mutual fund industry net assets hit P43.9B in 2003

The net assets of the country’s expanding mutual fund industry grew from P25.8 billion as of end December 2002 to mind boggling P43.9 billion last year.

"During the previous year 2003, the net assets of the Philippine mutual fund industry grew by P18.2 billion or 70.5 percent from the previous year, perhaps the biggest growth rate in the financial and investment sectors of the country," said Fernando Jose Sison III, president of the Investment Companies Association of the Philippines (ICAP).

ICAP officials had originally wanted assets under management (AUM) to break the P50-billion psychological barrier. Poor economic conditions and the lack of public information of the industry remained among the major barriers.

Nevertheless, the industry is confident that 2004 will continue the trend of growing by leaps and bounds "although it may not be as outstanding as 2003," they confessed.

In fact, it is another record established by the country’s mutual fund industry composed of 23 mutual funds. These are: five stock or equity funds, seven bond or fixed income funds, 10 balanced (equity and fixed income) funds, and a single money market fund.

To meet the growing demand and entice a whole set of investors, the industry vowed to continue its information campaign as well as introduce new products.

Already, the Philam Asset Management Inc. (PAMI) will be launching a strategic growth dollar fund while the former Far East Dollar Bond Fund will soon be renamed to the Ayala Life Fixed Income Dollar Bond Fund or simply ALFIDBF.

There are 10 asset managers that run the 23 funds. These are: BPI Asset Management and Trust Group (Ayala Life Fixed Income Fund and Far East Dollar Bond Fund); Philam Asset Management Inc. (Philam Strategic Growth Fund, Philam Fund, Philam Bond Fund, GSIS Kinabukasan Fund, and Philam Dollar Bond Fund); Sun Life Financials (Sun Life Prosperity Philippine Equity, Sun Life Prosperity Balanced, Sun Life Prosperity Dollar Advant, and Sun Life Prosperity Bond Fund). The Philippine Index Fund is managed by another BPI group.

There are three "independent" funds (or a single asset manager running just one fund): United Fund, First Galleon Family Fund, and Philequity Fund.

The industry will also continue to lobby for a better growth environment through continued dialogue with regulatory agencies and the legislative branch of government.

One issue still to be resolved is the entry of foreign fund managers interested in operating mutual funds in partnership with local managers. Or if government will allow foreign fund managers to run its own mutual funds similar to other Asian countries.

"The issue of double taxation and other restrictive regulations particularly on overseas investments by mutual funds must be resolved if the industry is to grow as fast or even catch up with its neighbors," they said.

At the start of the 21st century, Thailand reportedly managed mutual funds amounting to $8-billion, Taiwan $3-billion, Malaysia $12-billion, and India $18-billion.

At one time, PT Danareksa, Malaysia’s state-run investment company managed assets amounting to $46 million while Pakistan‚s overseas funds along amounted to $500 million.